Middle Britain hit hardest by long-term care reform delay

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Workers on middle incomes will bear the brunt of the pain from the Government’s delay to a cap on the cost of long-term care, according to research.

A study published by a Care and State Pension Reform research team, backed by the Pensions Policy Institute, found those needing care will lose out on up to £34,000 in state contributions after the reform was pushed back to 2020.

The Government announced plans to delay the so-called “Dilnot Cap” – which would have limited care costs to £72,000 – in July last year.

Speaking to Money Marketing, Liberal Democrat former care minister Norman Lamb described the move as “abandonment” of the reforms.

Researchers examined the fortunes of unmarried individuals aged 78 in 2016, for illustrative purposes. They are then presumed to have entered residential care at age 82, before dying at age 86.5.

While those on low incomes will be broadly unaffected by the changes, and continue to be entitled to state support, the research found people on both median and high incomes would receive over £34,000 in contributions to care if the cap was introduced in 2016.

Based on median earners owning a home valued at £300,000, the research estimates approximately 10 per cent of that capital would be depleted over three years before the cap is reached.

However, the delay means middle earners will see their capital depleted by approximately 20 per cent by the time of death, according to the report.

The report says: “The effect of the delay is arguably highest for the median earning vignettes.

“Compared to higher earners, they currently meet a greater proportion of their care costs by drawing down in their capital. However, the effect of the delay on capital depreciation is substantial for both.”